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Marketing Metrics & Analytics

For the next week, we are going to explore the measurements used in marketing to keep track of business activities. It’s easy to do something that you think might generate sales, or achieve some other goal, but how do you REALLY know if you have succeeded?

How do you know how well – or how poor – your performance actually was?

The answer is through metrics and analytics, which is why these measurements are vital – and fundamental – to running a successful business. The good news is that a lot of this work can ultimately be done for you by software, but at the end of the day, I’m a firm believer that you need to understand what that software is measuring. A sound understanding of the basics is essential for anyone wanting to get ahead in marketing. So, without further adieu, let’s get started!

Day 1: The Basics of Marketing Metrics & Analytics

The Basics

Metrics measure marketing efficiency and effectiveness. They measure the various strategies, marketing initiatives, and other activities that make up a company’s goals. Tracking marketing metrics often involves creating a metrics framework and/or utilizing one or more marketing dashboards. The exact way company’s track marketing metrics varies greatly.

Analytics refers to the actual information that comes from the analysis of marketing metrics. Analytics assess efficiency and typically include:

Descriptive Analytics –These analytics allow you to gain insight from historical data – things that have already happened in the past activities of your business.

Diagnostic Analytics –This refers to trying to understand why something happened. This can be difficult to assess because most effects have multiple causes, and although sometimes these causes may be obvious, most of the time they are not.

Predictive Analytics –These help predict the impact of future activities on your company. This is also referred to as ‘forecasting’.

Prescriptive Analytics –Once you can forecast with a reasonable degree of probability what is going to happen, then you can come up with meaningful ideas of how to make it more possible if it is a desirable outcome… and what steps to take to prevent it, if it is a undesirable one.

In other words, metrics measure what is happening in real life, and analytics draw conclusions from the raw data of those measurements.

Why Are Metrics and Analytics Important?

Marketing metrics and analytics are vital for the success of your company for several reasons:

The first and most important reason is that they allow you to track how your company is doing.

You are able to measure your Return on Investment (ROI), the growth of your company, who you are reaching, and what your following is.

In the world of marketing, it’s not enough to simply say something is – or is not – working. You need to back up these beliefs with factual evidence. Marketing metrics and analytics allow you to do this. Not only do they allow you to track your success, but they also allow you to prove it.

Day 2: Creating Successful Metrics & Analytics, Knowing What To Track

Think of this process like you’re going to the doctor. First, you describe the symptoms you have. Then using knowledge of similar situations, the doctor makes a diagnosis of why you are feeling this way. Next, he predicts what will happen to you if this problem continues. And finally, he writes a prescription for treatment that will hopefully help you get better.

Know What to Track

This comes top of the list because it is the single biggest mistake people make when it comes to metrics and analytics. You don’t have to track everything. In fact, many things will not matter in the end. The key to success is knowing what you need to track, and what you can leave out.

Unfortunately, however, knowing which metrics you need to track can be difficult. Unlike knowing what to report, which you will soon learn always stays the same, what to track varies from situation to situation. You must determine which metrics will provide a proper assessment of how well your marketing strategies are working, and which ones are a complete waste of your time – and money.

Now, before we go any further, I do want to make a quick note on calculations and what statisticians call levels of confidence:

When you do a calculation, you might generate a number like 12.3495067%. No figures are perfect and often times something like 10,3562 gets rounded up to10,400 (please NEVER round down). In addition, what difference will it make to your conclusions if, in our example, the number is 12.3495968%? Usually it makes no difference at all.

When presenting your metrics, ‘round out’ the numbers to reasonable terms. For large numbers, stop at the decimal point, or even earlier, so 5,764.342 would sensibly become 5,765. For smaller numbers, usually it is best to stop after one decimal point, or very rarely two.

Always ‘round up’ the last number remaining if it is 5 or more – for example, 5.44 = 5.4, but 5.45 = 5.5.

Here is a comprehensive listing of the most commonly tracked metrics…

OF NOTE: unless otherwise indicated, these metrics are measures as actual numbers – for example, 457 hits per day. It may sound obvious, but you should use the same measuring period for all your metrics as much as possible, or at the very least, make it clear that the periods are different, by including the specified period when you are making your calculations.

Studying this list carefully will help you to decide where to focus your marketing efforts:

General Website Traffic – This shows the total number of views both your site and your site’s individual pages have received.

Traffic Sources –This tells you where the traffic to your website and/or blog is coming from. Knowing where your traffic is coming from helps you assess which channels, offers, etc. translated into actual website traffic.

Your Company’s Total Reach –This is the total number of people connected to your company in some form. This metric is important because it tells you just how many people are seeing your content firsthand, directly from the source.

Your Company’s Reach By Channel –This tells you where your audience is coming from, as numbers from each source. It might include metrics for your social media sites, blog, website, email subscriptions, etc. These numbers will help you identify which channels are best at bringing in new customers, as well as retaining them.

Engagement Levels –This measures the level at which your customers are engaging with your content. This is important because it shows you how well your customers are connecting with your content. Two measurements are needed to determine this:

Engagement Volume is a raw count of people who actually did something on your site. It includes metrics like Facebook likes and Twitter retweets.

Base Volume: This can be measured in three ways:

Followers. This is the actual numbers of followers you have. Since that number is often amplified by something going viral, or by paid amplification, it may not always be a a meaningful measurement.

Reach. This is the number of people you touch with your pages – for example who read at least part of a blog.

Impressions. This is your reach multiplied by frequency. If you reach 50 customers three times each, then you have created 150 impressions. You would get the same result if you reached 150 customers once, but in terms of sales, that might not give the same result.

Engagement Rate is determined by dividing Engagement Volume by the Base Volume.

Here’s how you calculate it:

Engagement Rate = Engagement Volume ÷ Base Volume

Cost Per Engagement is something else you should calculate, since it’s critical for assessing the cost-effectiveness of a paid campaign.

Here’s how you calculate it:

Engagement Volume ÷ Spend

Bounce Rates –This measurement shows you how many people are coming to your site and leaving without taking any further action. You want this number to be as low as possible. The higher it is, the worse your site is performing. More on this later…

Call To Action (CTA) Clickthrough Rate –This is the rate at which users are following up on what your calls to action tell them to do. This helps measure the effectiveness of your calls to action in general. If this number is low, it too signifies that there is a problem, and that you need to adjust your calls to action to better engage with your target audience.

Here’s how you calculate it:

[Follow-ups ÷ Total Users Contacted By The Call To Action] x 100

So if you have 50 follow-ups on a total contact rate of 500, your clickthrough rate is:

[50 ÷ 500] x 100 = 10%

Prospects – These are individuals your company has made contact with that have not become leads yet. You don’t have their contact information, which means you can’t make contact with them.

Total Lead Generation – This is the total number of leads your company has generated. When someone becomes a lead, you have their contact information and can potentially turn them into a new client/customer.

Visit To Lead Percentage – This marketing metric is important because it tracks the effectiveness of the steps you have taken on your site to turn site visits into actual leads. This could have been through calls to action, promotions, and offers that are likely to be relevant to a potential buyers needs.

Cost Per Lead –Let’s get serious here for a minute. Since you’re taking this course, we both know that your primary goal is to generate leads at the lowest possible cost for your company, which means knowing your cost per lead is a key metric you cannot afford to ignore. When you’re tracking this metric, however, don’t overly generalize. Track your lead generation efforts per channel and per campaign, so that you can separately assess each approach and evaluate effectiveness.

Total Marketing Qualified Leads (MQLs) Per Month –These are the leads that are ready to become sales… meaning you have all the information you need and some chance of success of converting that lead into a buyer. Measuring the total number of MQLs each month will help you determine how effectively your leads are being nurtured (aka: how many transform from a generic lead to ‘sales-ready’).

MQLs Per Channel – This helps determine how well your leads are developing per channel, which can help you assess the relative merits of your different marketing channels.

Conversion Rate –This is the number of leads that actually turn into sales. This is important because it assesses the quality of your leads at any given time. A low rate can indicate poor leads, poor salesmanship, poor products, or any combination of these things.

This is also a percentage – and here’s how you calculate it:

[Number of Sales ÷Total Leads] x 100

So if you had 1,000 leads and you closed 200 of them in the period being measured, your Conversion Rate is:

[200 ÷ 1,000] x100 = 20%

Lead Cycle Time –This is the average time it takes to turn a lead into a sale. It is measured in hours, days, weeks, months, and sometimes even years, depending on the industry and type of sale.

To calculate this: Add up all the time to takes to make a successful sale and divide that number by the total number of sales.

So in a simple example, if 3 sales took 4 days, 7 days and 2 days respectively, the Lead Cycle Time would be [3 + 4 + 7] ÷ 3 = 4.7 days

Close Rate Per Channel –This number tells you how effectively each channel is working. It allows you to compare the quality of leads per channel versus leads in general. This is important because it can help you decide where it’s most effective to direct your funding. Once you’ve analyzed this information, you’ll want to cut spending on less effective channels, and increase it on channels that are more effective.

Revenue –Revenue is the end goal of all marketing efforts, and you must track it in detail. Be consistent in your measurements, using the same indices every time, so you know how close or far you are from reaching your financial goals at any given point in time.

Revenue Pipeline –Your revenue pipeline is a set of figures that shows where all your activities are – how many leads you have, which leads are close to closing, and which leads have closed. This metric allows you to project the value of the leads you have collected. Knowing this helps to align marketing and sales quotas.

Unique Visitors to Your Site –This tells you how many individual people are actually viewing your site instead of how many views you have in total. This can give you a much more realistic idea of how your website and company are growing.

Inbound Links – This is the number of outside people who have found your content important enough to link it to their own sites or pages. The more high quality inbound links you have, the higher you will rank in the search engines.

Retention Rates – This is the number of clients you are retaining. So essentially, how well you are keeping clients once you get them.

Here is how you can calculate the rate:Retention Rate % = [(CE-CN) ÷ CS] X 100

CE = the number of customers at the end of the period you are going to measure. This could be a week, a month, or a quarter, for example

CN = number of new customers acquired during the measured period

CS = number of customers at the start of the measured period

Now, let’s work on a practical example…Say you start out the week with 500 customers. During the week, you gain 60 new ones, but lose 15.

To calculate this:Add up all the times taken for each successful sale and divide by the total number of sales.So, at the end of the week, you have (500 + 60 – 15 = 545) customers.Your numbers therefore are: CE=545, CN=60, and CS=500. If you plug those numbers into the formula, you end up with something like this: [(545-60) ÷ 500] X 100, or 97%. Therefore, your Retention Rate is 97%.

Is this a good rate? Probably, but it depends on what industry you are in, what the market is like, and what your goals are. This decision is not part of measuring metrics – it’s for the analytics phase, which we will cover later.

Net Promoter Scores – This is a simple metric, measured as the answer to the question ‘How likely is it that you would recommend our brand to a friend or colleague?’ Respondents are divided into three categories:

Promoters (score 9-10) – These are loyal enthusiasts of your products/services who will keep buying from you and referring others.

Passives (score 7-8) – These are satisfied but unenthusiastic customers who may move on to your competitors, given the right incentives.

Detractors (score 0-6) – These folks are the unhappy customers who can damage your brand through negative word-of-mouth.

Return On Investment (ROI) – Your ROI is your net profit related to the size of your investment, or the value of the assets used, or in a particular activity.

This metric is widely used in measuring the success of marketing campaigns, and it is covered fully in the Bonus Appendix of this course. This material should be referred to and studied while you are working through the course and NOT left until the very end. Please refer to it often, since doing so will help you pull the maximum amount of benefit from this course.

So if you spent a total of $100,000 dollars on stock, advertising, sales commissions, and other expenses related to sales, and your total sales were $110,000 then your profit margin is: [(110,000 – 100,000) ÷ 100,000] x 100.

Operations – A large part of a company’s cash comes from its internal sources, primarily sales. Deductions from it include decreases in working capital, like the decline in the value of assets (write-downs) and current liabilities (bills, including salaries).

Capital Investing – Usually capital invested into a company becomes a capital expenditure, that is, spending on business premises – both land and buildings – and equipment, from machines to desks, chairs and computers. It is also used for expansion by acquisition of other businesses. Sometimes it may be a source of cash flow into the company, when assets – from old desks to companies – are sold to generate cash.

Financing – Companies borrow cash and then repay it later. This could be through loans, private investors, or by issuing stock. So these activities can be either cash flowing in – or out – of a company.

This is an EXTREMELY important step. Unfortunately, it’s almost as prone to mistakes as decisions about what to track in the first place.

At the end of the day, the most important metrics and analytics fall under five categories: revenue, margins, profit, cash flow, ROI, and shareholder value.

Are your marketing efforts viable to the company? Do they generate revenue directly, or contribute to the overall revenue of the company? Are marketing efforts assisting in profit growth? THESE are the questions you need to be focusing on.

Exact Metrics Examples

Now that you know what type of metrics to report, let’s look at a few of the exact marketing metrics in each of these five umbrella categories. Within the categories are examples of items discussed under ‘Metrics’ above, as well as a number of other common measures of business success.

Revenue Marketing Metrics – These include: total lead generation versus targets; lead cycle time; conversion rate, the size of your prospect database, and the marketing contribution forecast based on revenue and the revenue pipeline.

Return On Investment (ROI) Metrics –These include: average selling price, sales cycle times, sales productivity, win rates, and the time it takes to bring a new sales representative to full productivity.

Don’t Forget – Design Your Marketing Program To Be Measurable

In order to accurately measure your marketing efforts, you have to plan in advance. So, before you begin formulating your actual plan, ask yourself the following questions:

What do you plan on measuring?

When (how often) will you measure?

How do you plan to measure these metrics?

These three questions will help guide the way as you create your overall marketing plan. What’s more, the answers to these questions should guide every decision you make throughout the entirety of your campaign.

What do you plan to measure?
Your answers to this question will help push you in the right direction. It’s important to note that you can’t just pick and choose which metrics you will measure and which you will not, however. Instead, think about which metrics will most benefit your goals, your campaign, and your company. For example, if you want to boost engagement, you will want to track engagement levels. If you are trying to increase ROI, you’ll need to track the metrics that are geared more towards that end goal. Make the decisions of what to measure by REALLY evaluating what your goals actually are.(PS: there is more detailed information on this topic in a later section)

How often will you measure them?
A number of time intervals are used in business, including: daily, weekly, biweekly, monthly, bimonthly, quarterly and annually. Some companies measure most things at all of these intervals, while others choose just one. Equally important to note is that some businesses measure certain metrics at one interval, while others do so at another one. You may even decide to measure a combination of two or three that are chosen for your specific needs. The decision is yours. Just be sure you are measuring often enough to easily track how well you are doing at any given time.

How will you measure them?
This depends entirely upon what you are measuring. There are often standards for most businesses, but there are also multiple ways to do it. You could, for example measure ratios, percentages, actual numbers, etc. To present the information, you may opt for flow charts, graphs, pie charts, etc. Whatever you are most comfortable with is what you should select.

Dashboards are an integral part of how you track metrics, and are created using software that produces a visual display of a large amount of relevant data for you to utilize. They provide an intuitive format that portrays the information in a way that anyone, regardless of whether they are inside or outside of the marketing program, will be able to understand.

Why Should You Use Dashboards?

There are many reasons your company should be utilizing dashboards, but the primary reason boils down to one thing: accessibility of information. Dashboards consolidate all of your marketing metrics in one central location, and lays them out in a tidy, easy-to-understand fashion, which helps to eliminate most technical calculation errors.

Dashboards can also help you make better, more informed marketing decisions. Since you are able to see everything in one place, you can look at a problem from all sides at once. Everyone else in marketing (and the rest of the company) can look at the exact same thing you are looking at at any given time if you allow them access. This means the doors of communication are always open, and everyone will know exactly what is going on.

How Do You Use Dashboards Properly?

The best dashboards are designed with your needs and goals in mind. Don’t overwhelm your dashboard with too many unnecessary metrics, however. I know it’s easier said than done, but trust me on this one. Focus primarily on the five most important metrics for your goals. If something else is completely necessary, you can add it, but think long and hard about whether adding it will benefit you in the long run.

Besides being selective about the metrics you choose to put on your dashboard, here are a few things to keep in mind when setting up your dashboards:

Use as few numbers as possible. Only the most important metrics should show as actual numbers on your dashboard.

Use speedometers to show how far you have progressed towards your goals. These simplistic visual aids can take the guesswork out of reaching goals, if they are utilized properly.

If you want to see trends for a specific metric over time, use line charts.

Take your time to create a visually appealing dashboard.

Remember the importance of displaying your dashboard offline as well. Physical dashboards, posted around your office, can serve as consistent reminders of what your employees and/or coworkers are working to achieve.

Tracking for Specific Goals

Earlier I told you to focus on the marketing metrics that are most important for your campaign’s goals. Here is a brief explanation of appropriate metrics, based on the goals you have set.

OF NOTE: these are not all the metrics you might decide to track for each of these goals – but they are the metrics you must track for each of these specified goals.

Day 5: Making Decisions Based Upon Your Analytics

The entire point of tracking metrics is so that you can use them to assist in your decision making. Metrics offer you solid facts to base your decisions on.

It’s impossible to go into every potential decision individually, but here are some useful tips on how to make decisions based upon your analytics:

Be ready to cut back on certain programs – or do away with them entirely – if they are not performing well.

When faced with a tough decision, rely on your analytics to guide you to the correct choice.

Metrics never lie. Never question them, even if you do not like what they say!

Use your analytics to help set your budget. Find the strategies that are generating the most leads at the lowest cost. Those are the ones to fund first, and adequately. Arrange your programs in order, with the best performing ones on top and then gradually move down your list to allot funding. If you run out fo funds before you get to the end, you know what needs to be cut.

ALWAYS use your analytics to back up your decisions. Never make decisions based on what you prefer to do, or what you think will be best.

These simple tips can help you make decisions based upon your marketing metrics and analytics. Each situation is different, but the main thing to keep in mind is that you need to back all of your decisions up with solid facts and numbers.

10 Additional Tips for Success

To make sure you are utilizing marketing metrics and analytics to their fullest potential, here are some must-use tips for success:

Remember that you do NOT have to track every tiny metric. Choose the right metrics for your goals and your company.

Never be afraid to cut programs if your analytics back up your decision. The funds that you originally designated for that specific program can be effectively used elsewhere.

The key to designing a measurable marketing program is to ask questions BEFORE you even start laying out the foundational groundwork of your campaign. What, when, and how are the key questions to ask yourself when tracking metrics.

Remember that the bottom line of any business comes down to revenue and faster growth. If you can fuel these two things, then your marketing is doing its job.

At any time you should know the impact of your marketing program as a whole, but just as importantly, you should also know the behavior of each individual component of your program.

Always take into account the risks associated with marketing investments. You have to look at these, along with the best and worst case scenarios, in order to make the best possible decisions for your campaign and your company.

Think ahead. Estimate of how profitable something will be, using average costs and what your past analytics suggest your profit could be. This will help you assess whether something is a good move or not. THIS is the essence of forecasting.

When setting up your dashboard, your primary focus must be on the five marketing metrics that are the most important for your campaign’s goals.

Try to remember that many aspects of marketing are trial and error. This means that sometimes your efforts will end up as ‘errors.’ When they do, do NOT freak out or throw in the towel. Notate that whatever you did or tried did not work and move forward from there with a better plan for the future.

To make the most effective use of marketing metrics and analytics, look at the past, present, and future… all at once.

5 Things to Avoid

Since you obviously want to utilize marketing metrics and analytics to their fullest potential, avoid the following at all costs:

NEVER be tempted to track every single metric. This will not only spread you too thin, but will also make analyzing your results much more difficult. Focus instead on the metrics that actually matter.

Do NOT be tempted to track whatever is easiest. Sometimes the best metrics may be hard to track, and the easy ones may be useless when it comes to helping you reach your goals.

NEVER falsify a metric. This is a surefire way to fail in your marketing efforts. Metrics are exactly what they are: cold, hard facts.

Do NOT be tempted to keep a program in your budget if it is not working, even if it is something you favor. Cut under-performing programs to make room for programs with better performance levels.

Avoid calculating an incorrect (and often highly unrealistic) ROI. Follow the method outlined above, or you may end up with a percentage that does not match the facts.

How Long Will It Be Before I See Results?

Once you start tracking your metrics, and subsequently doing the appropriate analysis, your first round of results should be almost immediately evident. Proper tracking of marketing metrics helps you take giant strides towards meeting your end goals from the second they have been properly set up. You will immediately be able to see where you stand, where you need to work harder, and what needs to be changed.

Further results will come with time. In order for marketing metrics to work as effectively as possible, you need something to look back on. Each week, month, and year that passes will gradually accumulate more results and give you a better picture to look at. When you are able to look back at how your previous campaigns and programs have worked, you will be much more successful in forecasting exactly what your future results might be. You’ll also have a better idea of what does – or does not work – for your company and your clients. In time, these metrics can help you make the best-informed decisions possible, which in turn will help your company perform better in every area.

How Do I Measure Success?

Success in tracking marketing metrics and analytics is easy to measure. Just ask yourself the following questions:

Is my tracking efficient? Am I keeping up to date on all my metrics? Am I tracking the right metrics? You’ll know the answers to both of these questions because you’ll have all the information you need to make decisions at any given point in time. If you have it all – fantastic! If not, alter your methods to reach that goal.

Am I using my metrics to make better decisions? You will make better decisions when you can see real time results of where your marketing campaigns stand. Having the right information to support your decisions is crucial, and good tracking can help you do this.

Is my campaign flourishing? Am I meeting my goals? When you are tracking efficiently and make better decisions based on your metrics, the results of your efforts should improve. If things still aren’t flourishing, it’s time to take a step back and re-evaluate.

Summary

Over the course of the past week, we’ve covered the following topics. PLEASE make sure you understand them well:

Marketing metrics and analytics – what they are and how they differ

The main kinds of analytics – descriptive, diagnostic, predictive, prescriptive

Why metrics and analytics are important

The main types of metrics measured in marketing

Deciding what to report – what does the CEO really want to know?

How to design a marketing program that you can measure

Using analytics to make the right decisions – dashboards and tracking for specific goals

Tips for success

Things to avoid

When you will see results

How to measure success

Conclusion

Marketing metrics and analytics are a vital part of every company’s activities. Using them, you track how your company is doing now, how it has done in the past, and how it might do in the future.

By utilizing the information in this section, you can begin to effectively track your company’s metrics and analytics, which in turn, will help you reach your revenue goals faster.